If you’re struggling with cash flow, we can help you negotiate with creditors including suppliers, landlords and HMRC.
Negotiating with creditors and stakeholders
If you’re struggling to balance your finances and being chased by suppliers for payment, you’re not alone. It may not feel like it, but you do have options. We help companies to quickly assess their options and to negotiate with creditors and suppliers to improve working capital and alleviate cash flow pressure.
Every situation is different, but we often find that creditors – whether suppliers, landlords or lenders – want to help and find a compromise, especially in the current climate. Lack of communication is often the biggest problem; creditors will expect you to have a realistic repayment proposal and will also want to know that you have asked for similar concessions from other stakeholders.
We’ve helped countless companies to successfully negotiate with their landlords, suppliers and HMRC – a coordinated plan, fronted by professionals, has a better chance of being accepted than a more ad-hoc approach.
What are your options?
We can work with you to assess your options and quickly identify solutions to ease financial pressure.
The first step is to prepare a realistic forecast to estimate how much cash you need. It needn’t be complicated; it just needs to be prudent and justifiable – particularly when it comes to sales. This is important for two reasons:
- Creditors who you are asking for support may want to see your forecasts. If the forecast is obviously unrealistic you are much less likely to get the buy-in you need from suppliers, lenders and landlords.
- You want a realistic picture for yourself of what your cash flow will look like. Over-optimism usually means you take insufficient action and makes the situation worse.
Once you have a realistic picture of your cash flow over the short/medium term the next step is to identify how this shortfall will be made up – this essentially means identifying which creditors you will ask for additional credit or extended repayment terms.
The third step is to put the plan into action. We can help you request a concession from your landlord(s), such as a rent reduction/holiday or different payment terms e.g. paying monthly. While landlords are entitled to take a hard line, many will use their discretion to avoid having vacant premises. However, they may well ask for detailed financial information and forecasts to inform their decision making.
Depending on what kind of facilities you have, banks or other funders may agree to a payment holiday, rescheduling of your repayments or a temporary increase in your overdraft or working capital facility. Similarly, asking suppliers, particularly the large ones, to relax credit terms is an option which should also be explored.Negotiating with creditors and stakeholders.
How should you approach creditors?
Our experience in dealing with creditors has shown that how you communicate and engage with them makes a big difference to the outcome
When it comes to negotiating with creditors it’s important to be upfront with them – they’re much more likely to co-operate if you ask them for help, rather than just unilaterally delaying payments.
Larger creditors, particularly funders, may want to see your forecasts and be comfortable that these are sensible if they are going to support you. They may also want you to explain what other measures you’re taking and which other stakeholders you’ve approached for help.
Coming up with a coherent plan and ‘selling’ this to your creditors might be outside your natural comfort zone – but it can be done. If you feel you need help with the process, we’ve helped hundreds of clients to prepare forecasts, identify how a cash shortfall can be managed and negotiate with creditors to agree extended credit or defer payments.
We can help you to prepare, draft and present robust information to stakeholders to address any concerns and get the best possible outcome.
